|
Author: Kevin Adelsberg Article source: http://www.mortgagerefinancingblog.com/. Used with author's permission.
When a mortgage broker asks a borrower to pay points, he or she is asking for a lending fee expressed as a percentage of the value of the loan. For example, two points on a deal worth $100,000 works out to $2,000.
Sometimes, a lender may require the borrower to pay "origination points" on a mortgage. This fee allows the lender to recover many of their costs sooner in the deal rather than waiting to recoup them as part of interest payments. Many lenders use origination points to advertise lower interest rates to potential home buyers. Though their interest margin is thinner, these institutions improve their cash flow by pulling in these profits on the front end of the loan.
Along the same lines, a lender may offer a borrower the chance to pay "discount points" to qualify for a greatly reduced interest rate on a new mortgage. In these deals, the customer can pay an extra percentage point or two of the loan's value as an upfront investment. In return, the lender agrees to knock the interest rate down by a quarter of a percent or more. Though the borrower surrenders more cash at closing, they enjoy tremendous savings over the life of the loan.
In this hyper-competitive, internet-fueled mortgage market, a handful of innovative lenders have experimented with "rebate points." They work very much like discount points, but in reverse. Cash-poor borrowers who want to purchase a home with little or no money down can receive a rebate of a percentage of the home's value. In exchange, they agree to accept a higher interest rate or a prepayment penalty. Though these deals work against the customer's long-term interests, they provide a valid solution for many prospective home buyers without the liquid capital needed to close the deal on a conventional mortgage.
Whenever dealing with points, borrowers should weigh all their available options to understand the best long-term deal for their situation. Home buyers with the ability to afford a large down payment and closing costs will usually benefit from paying discount points. Customers with spotty credit histories may have to lump origination points to a lender that's willing to run a manual underwriting review on their case. Kevin Adelsberg is a writer for FasteMortgage.com. For additional articles and an extensive resource for everything about mortgages, please visit us at http://www.FasteMortgage.com
Get FREE Web Tips From Your Competition
How can you, the savvy business entrepreneur, get FREE ANYTHING from your competition? The answer is simple...
Single Mother Resources Directs You Towards Success
As a parent you are bound to face a few challenges but as a single mother you are bound to face challenges almost everyday. Raising a child is not meant to be ...
Website Globalization
Globalize Your Website The Internet has unlocked a wide array of markets and knocked down barriers that previously prevented merchants from marketing their prod...
Highly Recommended Pre-Fab Marketing Business
Unfortunately most 'ready-made' business sites don't seem to be very user or customer friendly and are extremely expensive for what is being offered. Most of th...
Criteria For Selecting Good Directories!
Directories are the best means for getting related links and targeted traffic. There are a huge number of directory sites present all over the world. Some of th...
Make Your Own Website - General Website Design Tips
You`ve finally come to this step! Learn how to make your own website. Also learn how to improve your design and how to avoid mistakes other websites do.. Also, ...
Storm Damage and Mature Tree Pruning
Prune storm damaged branches safely and effectively. Tree branches can be heavy and difficult to handle. The way they are removed can affect the long term hea...
Turning Sales Techniques Into Sales Success!
There are a number of methods you can use to move beyond an intellectual awareness of new sales techniques and systmes. By applying the ideas outlined in this a...
Beware the Shark Infested Waters of Ebay: Ebay Fraud Run Amok
How to spot Ebay scams.
OJT - On The Job Training
Managers have two powerful ways of improving the performance and productivity of their subordinates, which are counseling and on the job training.
How to Get Free Internet Merchant Accounts
Reasons for choosing a third party processor instead of a full merchant account when your business is not big enough to justify this.
You CAN Be a Great Salesperson!
When you are in sales, you have the choice to be successful or unsuccessful. The only one to set limits on your income and success is you! A career in sales is ...
Attraction vs. Love
Attraction should be more than skin deep. We should fall in love with the person inside the body, not with the body, itself.
Evangelical Skepticism: Pursuing Your Right To Be Wrong
Michael Shermer speaks with the energy and passion of an evangelist, so it's not too surprising to learn that he used to be one. What is surprising is that he h...
Pay to Play: The Truth About Free Online Music Downloads
Recently a client of mine was very excited to try downloading music after getting high-speed internet. After several searches for unlimited music download serv...
Dont Be Jealous - Be Inspired
Instead of being jealous of others, focus on being inspired. Let the success of others move you forward toward your own success.
Teaching Preschool Color and Shapes with Family Games
My kids just can't get enough of playing games with Mom and Dad--can yours?
Acne Proactive Solution: Treatment to the Stars
You may have seen the infomercials featuring stars like Jessica Simpson and Vanessa Williams, but is the science ...
The Benefits of Buying Used Store Fixtures
The difference between antique or vintage store fixtures and used store fixtures is simple: antique fixtures have a classic look and style. In many cases they ...
When Should You Hire or Fire a Life Coach?
Life coaching is a tool that has helped many people change or improve their lives through effective coaching sessions with a competent life coach. The following...
Things To Do When Considering a Home Loan
Making the decision to become a homeowner is one of life's biggest decisions. Planning and preparation is the key to achieving the goal within the desired time ...
Looking For A Russian Bride? You Need This Valuable Information on Russian Women
Russian women are formidable candidates to make an excellent wife. But you have to understand their cultural background and abandon many misconceptions in order...
Guest Articles: Good for Some, Bad for Others
A recent debate started me thinking about how some marketing strategies can be right for one Web site, but wrong for another -- depending on the site's purpose ...
Gerald Hawkins
Genetic Information transfer and the math of the Earth Energy Grid are connected and ancients attuned to this.
|
Print this page